Walker v. Countryside Cas. Co.

• Decision Date: 13 December 1965
• Docket Number: No. 5-3710,5-3710
• Citation: 239 Ark. 1085,396 S.W.2d 824
• Parties: Joseph Eugene William WALKER and William J. Koch, Appellants, v. COUNTRYSIDE CASUALTY COMPANY, Appellee.
• Court: Arkansas Supreme Court

Page 824

396 S.W.2d 824

239 Ark. 1085

Joseph Eugene William WALKER and William J. Koch, Appellants, v. COUNTRYSIDE CASUALTY COMPANY, Appellee.

No. 5-3710.

Supreme Court of Arkansas.

Dec. 13, 1965.

Batchelor & Batchelor, Van Buren, H. Clay Robinson, Fort Smith, for appellants.

Shaw, Jones & Shaw, Fort Smith, for appellee.

HARRIS, Chief Justice.

William J Koch, one of the appellants herein, a resident of Logan County, owned a dump truck, and was engaged in hauling various materials. Joseph Eugene William Walker, the other appellant, is also a resident of Logan County, and was eighteen years of age at the time of the occurrence hereinafter discussed. On December 24, 1962, Walker, while assisting in greasing the dump truck, was injured when the bed of the truck fell on him, crushing his right leg; the leg was subsequently amputated. Thereafter, Walker, through his mother as next friend, instituted a suit against Koch, alleging negligence on the part of that person, and seeking damages in the sum of $77,586.75. Koch, who held a policy of liability insurance on the truck with Countryside Casualty Company, appellee herein, made demand upon the insurance carrier to defend the action. Countryside took the position that coverage was not afforded under terms of the policy, because Walker was an employee of Koch, but the company did assume the defense under a reservation of rights; subsequently, Countryside filed an action for declaratory judgment, asserting that a controversy existed between the company and appellants. Appellee asserted that, under the policy of insurance held by Koch, it was not required to defend, nor was it required to pay any possible judgment up to the limits of the policy. The company prayed that the court enter its declaratory judgment, finding that appellee did not owe any obligation under the policy of insurance held by appellant Koch. On trial, the court, sitting as a jury, held that, due to an exclusion clause in the contract, excluding coverage where any employee of the insured was injured while in the course of his employment, the company was not obligated to defend the suit brought against Koch by Walker, and would not be obligated to pay any part of any judgment rendered against Koch. From the judgment entered in accordance with these findings, appellants bring this appeal.

Under the terms of the insurance policy issued by appellee to Koch, coverage is excluded for:

'(e) Bodily injury to any employee of the insured arising out of and in the course of (1) domestic employment by the insured, if benefits therefor are in whole or in part either payable or required to be provided under any workmen's compensation law, or (2) other employment by the insured.'

The Circuit Court held (2) to exclude coverage to appellant Koch. Appellants, in separate briefs, argue several points. Walker urges that the insurance policy in question excludes coverage to employees only if the employees are covered by Workmen's Compensation Insurance, and he (Walker) was not covered by compensation insurance. Both Walker and Koch argue that the clause is ambiguous, and that the trial court accordingly should have resolved the language in favor of the insured, rather than the insurer. It is asserted that the phrase referring to workmen's compensation coverage applies to Sub-section (2) as well as to Sub-section (1), i. e., the intent of (e) is that an injured employee, of any kind whatsoever, is to be covered by the policy unless the employee is also covered by workmen's compensation insurance. It is further urged by appellants that, to say the least, the clause is ambiguous. We do not agree. First, let it be said that a provision excluding coverage for injuries to employees has been held to be unambiguous, and to be valid and enforceable. 7 Appleman, Insurance Law and Practice, Section 4415. In the South Carolina case of Rhame v. National Grange Mutual Insurance Company, 238 S.C. 539, 121 S.E.2d 94, the identical exclusion language was passed upon by that court. The entire exclusion clause provided that the policy did not apply:

'(g) under division 1 of coverage C, to bodily injury to or sickness, disease or death of any employee of the named insured or spouse arising out of and in the course of (1) domestic employment by the named insured or spouse, if benefits therefor are in whole or in part either payable or required to be provided under any workmen's compensation law, or (2) other employment by the named insured or spouse.'

The court, in an opinion by Mr. Justice Moss, said:

'In the case of Quinn v. State Farm Mutual Automobile Ins. Co., 238 S.C. 301, 120 S.E.2d 15, 16, we said:

'It is a well settled rule that the terms of an insurance policy must be construed most liberally in favor of the insured and where the words of a policy are ambiguous, or where they are capable of two reasonable interpretations, that construction will be adopted which is most favorable to the insured. Pitts v. Glen Falls Indemnity Company, 222 S.C. 133, 72 S.E.2d 174. However, in cases where there is no ambiguity, contracts of insurance, like other contracts must be construed according to the terms which the parties have used, to be taken and understood in their plain, ordinary and popular sense. If the intention of the parties is clear, the Courts have no authority to change the contract in any particular. The Court has no power to interpolate into the agreement between the insurer and the insured a condition or stipulation not contemplated either by the law or by the contract between the parties. Chastain v. United Ins. Co., 230 S.C. 465, 96 S.E.2d 464.'

'Insurers have the right to limit their liabilities and to impose whatever conditions they please on their obligations, provided they are not in contravention of some statutory inhibition or public policy. Accordingly, an insurer need not protect against all liabilities and a clause exempting certain liabilities from coverage is valid. * * *

'* * * There is excluded from coverage, under section (g)(1) of said clause, domestic employees, if benefits for such injury, sickness, death or disease is payable under any workmen's compensation law; there is also excluded from coverage, under section (g)(2) of said clause, other employment by the named insured or his spouse. In our opinion, the provisions of the insurance policy heretofore quoted, are free from ambiguity, doubt or uncertainty as to the risks included and excluded.'

In Clinchfield Railroad Co. v. United States Fidelity & Guaranty Co., D.C., 160 F.Supp. 337, decided by the United States District Court for the Eastern District of Tennessee, Northeastern Division, a similar exclusion provision in an insurance policy was involved. There, the exclusion, and defendant's argument are as follows:

"This policy does not apply:

(d) under coverages A and C, to bodily injury to or sickness, disease or death of any employee of the Insured while engaged in the employment, other than domestic, of the Insured or in domestic employment if benefits therefor are either payable or required to be provided under any workmen's compensation law;'

'Defendant says that by deleting the inapplicable language from the foregoing exclusion provision that it would read thus:

"This policy does not apply:

(d) under coverages A and C, to bodily injury to * * * any employee of the Insured while engaged in the employment * * * of the insured * * *".

After reviewing several cases, the court stated:

'The Court concludes that the exclusion provisions of the policy in this suit are not ambiguous or subject to different interpretations but that the plain meaning of them is that employees suffering injuries while in their employment, other than domestic employees unless covered or subject to coverage by the Workmen's Compensation Act, are not within the coverage of the policy.'

A clause with some similarity was also involved in the Georgia case of Aetna Casualty and Surety Co. v. Howell et al., 108 F.2d 148, decided by the Circuit Court of Appeals for the Fifth Circuit. There, the exclusion clause provided that the policy did not apply,

"(e) to bodily injury to or death of any employee of the Insured while engaged in the business of the Insured, other than domestic employment, or in the operation, maintenance or repair of the automobile; or to any obligation for which the Insured may be held liable under any workmen's compensation law: * * *".

In commenting upon this clause, the court [referring to the District Court] stated:

'The court found that the exclusion clause (e) contained two exceptions, one being 'domestic employment' and the other 'employment in the operation, maintenance and repair of the automobile.' We disagree with that ruling. We do not find the clause ambiguous. The clause 'other than domestic employment' set off by commas, is parenthetical, solely of itself and should not be coupled with what follows. Omitting it, the exclusion clause plainly means the policy does not apply to bodily injury or death of any employee of the insured while engaged in the business of the insured or while engaged in the operation, maintenance or repair of the automobile.'

Other cases could be cited, but let it suffice to say that we agree with these rulings. We find no ambiguity in the language, and hold that the phrase, 'other employment by the insured,' simply means that no coverage under the policy is afforded where an employee of the insured is injured...